Are you open to a new idea for increasing the sales and profitability of your dealership?

Here's a way to increase sales by not adding to your inventory!

The biggest mistake car dealers make is not testing various themes in their display ads and analyzing the results - both the front-end response (people walking in the door or calling) and the closing rate (people actually buying cars). As a car dealer, you'll run circles around your competitors by tracking and analyzing:
 1) the cost per lead
 2) the percentage of leads converted
 3) the average sale per conversion, and
 4) the residual value of each conversion (the future value of repeat business from that customer).

Here's a blockbuster idea which has been presented to several car dealers. Frankly, most are so myopic that they balk at the idea (but it's one you could use to generate a lot of money).   It's part of my 'host/parasite' concept, in which you play off of someone else's assets, or let them play off of yours.   Briefly, if an ad costs you $10,000  and brings 100 customers into the showroom, your cost per lead is $100.   Let's say you can only sell ten of them,  and your profit before commissions on each is $2,000. But because those ten sales cost you $1,000 each in  advertising, your real profit before commissions is only $1,000.   Those ninety leads that didn't convert cost you half your profit!

Why couldn't you close them?  Probably because they didn't want what you were selling!  You can't sell a Ford to someone who really wants a Toyota, no matter how good your salespeople are.

For this reason, I suggest that you make a deal with all your competitors (those selling other makes of cars) whereby you either try to sell your competitor's cars to your prospects, or you furnish your competitors with the names, addresses, and phone numbers of the prospects you didn't close.

You then split the profit with your competitor according to how much work you put into the sale.  If you actually closed the sale of your competitor's car, then naturally you should be paid more than if you merely turned over the lead.  The least you want to get out of the prospect is the $100 or whatever it cost you to bring him or her onto your lot in the first place.   If you can accomplish that, you have recouped your ad cost and you're not charging it against the sales you do make, and therefore the profit on those sales (at least in the example above) is double what it otherwise would have been if you didn't use this technique.

Your competitors may not go for this. They'll say, “Why should I pay you for the leads when they're going to come on my lot anyway if they really want my car?'

And you respond: “They may come onto your lot, and they may not. Prospects are fickle. They may wander onto someone else's before they get to yours, and some slick salesperson may get them into a car and burning fuel before you even see their face!  Why risk that, when a sale today is worth two sales next week?”

“Also, because I've already talked to these prospects, they have established a relationship with me and have developed a degree of trust in me, especially if I've honestly agreed that I don't have what they want.   If I recommend you over all the other dealers out there (especially competitive dealers selling the same car you are), don't you think that's worth something?”

“They'll be much more favorably disposed to go to you and buy from you because I told them frankly that my cars aren't what they're looking for, but yours are.   What's more, you won't have to spend a dime in advertising cost to bring these customers onto your lot.   I've already spent the money and pre-closed them for you.   I'm saving you money, preserving your cash flow, and doing your work. What more could you want?”

If you close the sale for your competitors, they should have no quarrel with giving you half the profits on the sale for the same reasons as mentioned above.   You've saved them time, money, capital risk, and effort.  Indeed, it's like having 'extra' salespeople they don't have to motivate, pay salaries to, pay taxes on, pay insurance on, etc.

As far as you're concerned, don't worry that people won't buy your product.   Are 100% of your prospects buying from you right now?   Of course not.  You can't please everybody.  But they are going to buy something.  Why let them get away without making any money off them?   That's foolish.   The best thing in the world is to make money off your competitor's products. (You have more products to sell that way)!

With this concept, you could increase your closing rate 50% or better, instead of 10% or whatever you're getting now.   And if you do have a fine product, people will buy your product if it suits their needs.   Don't think you're going to be host/parasiting yourself out of business just because you're recommending your competitor's products all day long.   It's a fact of life that your product isn't right for some people, so why put your tail between your legs when they don't buy it?   Sell them what they want!

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